PNFP Reports Diluted Earnings Per Share of $0.82 for 1Q 2017

Excluding merger-related charges, diluted EPS was $0.83 for 1Q 2017

April 17, 2017 05:58 PM Eastern Time

NASHVILLE, Tenn.--(EON: Enhanced Online News)--Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income
per diluted common share of $0.82 for the quarter ended March 31, 2017,
compared to net income per diluted common share of $0.68 for the quarter
ended March 31, 2016, an increase of 20.6 percent. Excluding pre-tax
merger-related charges of $672,000 and $1.8 million for the three months
ended March 31, 2017 and 2016, respectively, net income per diluted
common share was $0.83 and $0.71, respectively, an increase of 16.9
percent.

“The first quarter of 2017 was a busy quarter for our firm, and one that
will serve as the foundation for continued growth for many years to
come”

“The first quarter of 2017 was a busy quarter for our firm, and one that
will serve as the foundation for continued growth for many years to
come,” said M. Terry Turner, Pinnacle’s president and chief executive
officer. “In January, we announced the proposed merger of our firm with
BNC Bancorp (BNC), expanding our presence into the Carolinas and
Virginia. We are excited to have already obtained the bank regulatory
approvals to merge our two firms and are now focused on securing the
required shareholder approvals. We continue to anticipate a late second
quarter or early third quarter 2017 merger of our two firms.
Additionally, soon after the announcement of the proposed merger, we
issued 3.2 million common shares in a public offering, which reduced
earnings per share for the quarter but positions the combined firm for
many years of future growth. Both we and BNC have experienced positive
reaction from our clients in response to our proposed merger, and once
the transaction is consummated, our firm will be doing business in many
of the Southeast’s most admired banking markets.”

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

Revenues for the quarter ended March 31, 2017 were $119.1 million, an
increase of $19.4 million, or 19.4 percent, from the quarter ended
March 31, 2016.

Loans at March 31, 2017 were a record $8.642 billion, an increase of
$192.1 million from Dec. 31, 2016 and $1.814 billion from March 31,
2016, reflecting year-over-year growth of 26.6 percent. Annualized
linked-quarter loan growth approximated 9.1 percent when comparing
balances as of March 31, 2017 to balances as of Dec. 31, 2016.

Average deposit balances for the quarter ended March 31, 2017 were a
record $9.099 billion, an increase of $308.3 million from Dec. 31,
2016 and $2.062 billion from March 31, 2016, reflecting year-over-year
growth of 29.3 percent.

“In the first quarter of 2016, our net loan growth was approximately
$284.7 million, $169.2 million of which was acquired from another
financial institution in connection with the hiring of several
commercial lenders in Memphis,” Turner said. “This resulted in net
organic loan growth of $115.5 million in the first quarter of last year,
compared to $192.1 million in the first quarter of 2017, an increase of
66.3 percent. Also, deposits increased by $521.3 million in the first
quarter of 2017, making the first quarter of 2017 an exceptional quarter
for deposit growth for our firm. Earlier today, BNC also reported strong
linked-quarter loan and deposit growth during the first quarter of 2017.
Client retention as well as client growth remains strong in both
franchises, and we could not be more excited about the future
opportunities for our combined firm.”

FOCUSING ON PROFITABILITY:

Return on average assets was 1.41 percent for the first quarter of
2017, compared to 1.30 percent for the fourth quarter of 2016 and 1.27
percent for the same quarter last year.

Excluding merger-related charges in each respective period, return
on average assets was 1.42 percent for the first quarter of 2017
compared to 1.37 percent and 1.32 percent for the fourth quarter
of 2016 and the first quarter of 2016, respectively.

First quarter 2017 return on average common equity amounted to 9.70
percent, compared to 9.61 percent for the fourth quarter of 2016 and
9.47 percent for the same quarter last year. First quarter 2017 return
on average tangible common equity amounted to 14.74 percent, compared
to 15.49 percent for the fourth quarter of 2016 and 15.04 percent for
the same quarter last year.

Excluding merger-related charges in each respective period, return
on average tangible common equity amounted to 14.89 percent for
the first quarter of 2017, compared to 16.34 percent for the
fourth quarter of 2016 and 15.64 percent for the first quarter of
2016.

“We continue to operate our firm at a high level of profitability and
are pleased with our first quarter metrics,” said Harold R. Carpenter,
Pinnacle’s chief financial officer. “The first quarter is usually a
slower growth quarter for our firm, given we traditionally grant merit
raises to our associates early in the year and because there are fewer
days in the quarter, which negatively impacts our net interest income
and several fee category run rates.

“BNC’s results will obviously impact our profitability metrics once the
merger occurs. That said, once the technology conversions are
accomplished we will begin to realize the full earnings potential of the
combined firm. During the first quarter of 2017, our technology
professionals, working with BNC, modified our technology conversion plan
for the transaction. Our plan is to convert Pinnacle’s client accounts
to BNC’s core system during the fourth quarter of 2017 and then combine
BNC’s client data with Pinnacle’s client data in the first quarter of
2018. Our belief is that this conversion plan significantly reduces
integration risk and is a prudent way to balance near term expense with
longer term benefits as our technology platform should serve the
combined firm for many years of future growth.”

OTHER HIGHLIGHTS:

Revenues

Revenue per fully-diluted share was $2.46 for the quarter ended
March 31, 2017, compared to $2.61 for the fourth quarter of 2016
and $2.44 for the first quarter of 2016. The aforementioned
capital raise negatively impacted revenue per fully-diluted share
by approximately $0.12 for the quarter ended March 31, 2017.

Net interest income for the quarter ended March 31, 2017 was $88.8
million, compared to $89.4 million for the fourth quarter of 2016
and $73.9 million for the first quarter of 2016.

The firm’s net interest margin was 3.60 percent for the
quarter ended March 31, 2017, compared to 3.72 percent last
quarter and 3.78 percent for the quarter ended March 31, 2016.

Noninterest income for the quarter ended March 31, 2017 was $30.4
million, compared to $30.7 million for the fourth quarter of 2016
and $25.9 million for the first quarter of 2016.

Net gains from the sale of mortgage loans were $4.2 million
for the quarter ended March 31, 2017, compared to $2.9 million
for the fourth quarter of 2016 and $3.6 million for the
quarter ended March 31, 2016, resulting in a year-over-year
growth rate of 16.5 percent.

Wealth management revenues, which include investment, trust
and insurance services, were $6.4 million for the quarter
ended March 31, 2017, compared to $6.2 million for the fourth
quarter of 2016 and $5.6 million for the quarter ended March
31, 2016, resulting in a year-over-year growth rate of 13.4
percent.

Income from the firm’s investment in Bankers Healthcare Group,
Inc. (BHG) was $7.8 million for the quarter ended March 31,
2017, compared to $8.1 million for the quarter ended Dec. 31,
2016 and $5.1 million for the first quarter last year.

“Our net interest margin decreased from 3.72 percent during the fourth
quarter of 2016 to 3.60 percent in the first quarter of 2017,” Carpenter
said. “During the first quarter of 2017, loan discount accretion for
fair value adjustments required by purchase accounting contributed
approximately $5.0 million to our net interest income, compared to $7.8
million during the fourth quarter of 2016. We anticipate that purchase
accounting will contribute between 0.10 percent to 0.20 percent to our
net interest margin in the second quarter of 2017, exclusive of any
impact of BNC’s fair value adjustments.

“The December 2016 and March 2017 Fed funds increases had a positive
impact on our results in the first quarter of 2017 and partially offset
the headwinds from reduced levels of discount accretion. Our balance
sheet remains in a solid asset sensitive position with the March 2017
rate increase potentially providing an additional $1.8 million in net
interest income in the second quarter of 2017. As to fee income, BHG
posted a solid quarter, and we remain confident that they will achieve
12 to 15 percent growth in 2017, which translates to 20 percent growth
in our noninterest income from BHG in 2017.”

Noninterest expense

Noninterest expense for the quarter ended March 31, 2017 was $62.1
million, compared to $62.8 million in the fourth quarter of 2016
and $54.1 million in the first quarter last year.

Salaries and employee benefits were $38.4 million in the first
quarter of 2017, compared to $38.0 million in the fourth
quarter of 2016 and $32.5 million in the first quarter of last
year, reflecting a year-over-year increase of 17.9 percent,
largely driven by an increase of 143 FTEs as well as annual
merit raises awarded in the first quarter of 2017.

Pre-tax merger-related charges were approximately $672,000
during the quarter ended March 31, 2017, compared to $1.8
million for the quarter ended March 31, 2016. Pre-tax merger
related charges during the first quarter of 2017 included
costs associated with our proposed merger with BNC.

The efficiency ratio for the first quarter of 2017 decreased
to 52.1 percent for the first quarter of 2017, compared to
52.2 percent for the fourth quarter of 2016. The ratio of
noninterest expenses to average assets decreased to 2.20
percent for the first quarter of 2017 from 2.26 percent in the
fourth quarter of 2016.

Excluding merger-related charges and other real estate
owned (ORE) expense, the efficiency ratio was 51.3 percent
for the first quarter of 2017 compared to 49.6 percent for
the fourth quarter of 2016, and the ratio of noninterest
expense to average assets was 2.17 percent compared to
2.14 percent between the first quarter of 2017 and the
fourth quarter of 2016, respectively.

“Our noninterest expense to average assets ratio for the first quarter
of 2017 is within our stated long-term goals of 2.10 percent and 2.30
percent,” Carpenter said. “Excluding merger-related charges, we believe
we will be able to maintain our expense base within those goals. That’s
due primarily to the operating leverage that has been created by both
our rapid organic growth and high-quality investments and acquisitions.”

Asset quality

Nonperforming assets decreased to 0.36 percent of total loans and
ORE at March 31, 2017, compared to 0.40 percent at Dec. 31, 2016
and 0.70 percent at March 31, 2016. Nonperforming assets decreased
to $31.3 million at March 31, 2017, compared to $33.7 million at
Dec. 31, 2016 and $47.9 million at March 31, 2016.

The allowance for loan losses represented 0.68 percent of total
loans at March 31, 2017, compared to 0.70 percent at Dec. 31, 2016
and 0.91 percent at March 31, 2016.

The ratio of the allowance for loan losses to nonperforming
loans was 232.9 percent at March 31, 2017, compared to 213.9
percent at Dec. 31, 2016 and 146.4 percent at March 31, 2016.

Net charge-offs were $4.3 million for each of the quarters
ended March 31, 2017 and Dec. 31, 2016, compared to $7.1
million for the quarter ended March 31, 2016. Annualized net
charge-offs as a percentage of average loans for the quarter
ended March 31, 2017 were 0.20 percent, compared to 0.21
percent for the fourth quarter of 2016 and 0.42 percent for
the first quarter of 2016.

Provision for loan losses was $3.7 million in the first
quarter of 2017, compared to $3.0 million in the fourth
quarter of 2016 and $3.9 million in the first quarter of 2016.

“Overall, asset quality for our firm remains strong,” Carpenter said.
“During the first quarter, we continued to reduce our investment in
non-prime consumer auto loans. Net charge-offs from the non-prime
consumer auto portfolio were $2.2 million during the first quarter of
2017, compared to $3.6 million of net charge-offs in the fourth quarter
of 2016. We have reduced portfolio balances in this portfolio from $66.9
million at Dec. 31, 2015 to $22.9 million at March 31, 2017 and
anticipate continued reductions in this portfolio over the next several
quarters.”

Other Highlights

In addition to the aforementioned pre-tax merger-related charges
of $672,000 incurred during the first quarter of 2017, two other
significant matters impacted the comparability of first quarter
2017 results to previous periods.

In January 2017, the firm issued 3.2 million shares of common
stock. Cash proceeds were approximately $192.1 million from
the issuance, net of offering costs.

On Jan. 1, 2017, Pinnacle adopted FASB Accounting Standards
Update (ASU) 2016-09, Stock Compensation Improvements to
Employee Share-Based Payment Activity, which represented a
change in accounting for the tax effects related to vesting of
common shares and the exercise of stock options previously
granted to the firm’s employees through its various equity
compensation plans. This change resulted in a reduction in
first quarter 2017 tax expense of $3.8 million.

“To increase our capital levels in connection with the anticipated
merger with BNC, we issued 3.2 million common shares in late January,”
Carpenter said. “We were very pleased with market demand for the shares,
which we believe is an indicator of the market’s positive reaction to
this transaction and the confidence the market has in the combined
franchise to deliver continued growth in the years to come. The
additional shares did increase our share count, thus negatively
impacting our fully-diluted earnings per share results for the first
quarter of 2017 by approximately $0.04.

“In addition, our results for the quarter were impacted by the tax
impact associated with equity compensation vesting. Previously these
amounts were a component of our firm’s paid in capital. With the
required adoption of the new accounting standard, the tax impact of
these activities is reflected in tax expense during the quarter when the
underlying equity compensation vests or the stock option is exercised.
Much of our equity compensation vesting usually occurs in the first
quarter. Should our share price continue to trade within recent ranges,
we believe the tax benefit for restricted stock lapses and stock options
expiring in 2017 will approximate $1.0 million for the remaining nine
months of the year, which should offset our anticipated effective tax
rate of 33 percent for this year.”

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on
April 18, 2017 to discuss first quarter 2017 results and other matters.
To access the call for audio only, please call 1-877-602-7944. For the
presentation and streaming audio, please access the webcast on the
investor relations page of Pinnacle's website at www.pnfp.com.

For those unable to participate in the webcast, it will be archived on
the investor relations page of Pinnacle's website at www.pnfp.com
for 90 days following the presentation.

Pinnacle Financial Partners provides a full range of banking,
investment, trust, mortgage and insurance products and services designed
for businesses and their owners and individuals interested in a
comprehensive relationship with their financial institution. The firm
earned a place on Fortune’s 2017 list of the 100 Best Companies
to Work For in the U.S., and the American Banker recognized
Pinnacle as the sixth best bank to work for in the country in 2016.

The firm began operations in a single downtown Nashville location in
October 2000 and has since grown to approximately $11.7 billion in
assets at March 31, 2017. As the second-largest bank holding company
headquartered in Tennessee, Pinnacle operates in the state’s four
largest markets, Nashville, Memphis, Knoxville and Chattanooga, as well
as several surrounding counties.

Additional information concerning Pinnacle, which is included in the
NASDAQ Financial-100 Index, can be accessed at www.pnfp.com.

Forward-Looking Statements

All statements, other than statements of historical fact, included in
this press release, are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act and Section 21E of the Exchange Act. The words "expect,"
"anticipate," "intend," "plan," "believe," "seek," "estimate" and
similar expressions are intended to identify such forward-looking
statements, but other statements not based on historical information may
also be considered forward-looking statements. These forward-looking
statements are subject to known and unknown risks, uncertainties and
other factors that could cause the actual results to differ materially
from the statements, including, but not limited to: (i) deterioration in
the financial condition of borrowers resulting in significant increases
in loan losses and provisions for those losses; (ii) continuation of the
historically low short-term interest rate environment; (iii) the
inability of Pinnacle Financial, or entities in which it has significant
investments, like BHG, to maintain the historical growth rate of its, or
such entities', loan portfolio; (iv) changes in loan underwriting,
credit review or loss reserve policies associated with economic
conditions, examination conclusions, or regulatory developments; (v)
effectiveness of Pinnacle Financial’s asset management activities in
improving, resolving or liquidating lower-quality assets; (vi) increased
competition with other financial institutions; (vii) greater than
anticipated adverse conditions in the national or local economies
including the Nashville-Davidson-Murfreesboro-Franklin MSA, the
Knoxville MSA, the Chattanooga, TN-GA MSA and the Memphis, TN-MS-AR MSA,
particularly in commercial and residential real estate markets; (viii)
rapid fluctuations or unanticipated changes in interest rates on loans
or deposits; (ix) the results of regulatory examinations; (x) the
ability to retain large, uninsured deposits; (xi) a merger or
acquisition, like Pinnacle Financial’s proposed merger with BNC; (xii)
risks of expansion into new geographic or product markets; (xiii) any
matter that would cause Pinnacle Financial to conclude that there was
impairment of any asset, including intangible assets; (xiv) reduced
ability to attract additional financial advisors (or failure of such
advisors to cause their clients to switch to Pinnacle Bank), to retain
financial advisors or otherwise to attract customers from other
financial institutions; (xv) further deterioration in the valuation of
other real estate owned and increased expenses associated therewith;
(xvi) inability to comply with regulatory capital requirements,
including those resulting from changes to capital calculation
methodologies and required capital maintenance levels; (xvii) risks
associated with litigation, including the applicability of insurance
coverage; (xviii) the risk of successful integration of the businesses
Pinnacle Financial has recently acquired with its business; (xix)
approval of the declaration of any dividend by Pinnacle Financial’s
board of directors; (xx) the vulnerability of Pinnacle Bank’s network
and online banking portals to unauthorized access, computer viruses,
phishing schemes, spam attacks, human error, natural disasters, power
loss and other security breaches; (xxi) the possibility of increased
compliance costs as a result of increased regulatory oversight,
including oversight of companies in which Pinnacle Financial or Pinnacle
Bank have significant investments, like BHG, and the development of
additional banking products for Pinnacle Bank’s corporate and consumer
clients; (xxii) the risks associated with Pinnacle Financial and
Pinnacle Bank being a minority investor in BHG, including the risk that
the owners of a majority of the equity interests in BHG decide to sell
the company if not prohibited from doing so by the terms of our
agreement with them; (xxiii) the possibility that the incremental cost
and/or decreased revenues associated with exceeding $10 billion in
assets will exceed current estimates; (xxiv) changes in state and
federal legislation, regulations or policies applicable to banks and
other financial service providers, like BHG, including regulatory or
legislative developments; (xxv) the risk that the cost savings and any
revenue synergies from Pinnacle Financial’s proposed merger with BNC may
not be realized or take longer than anticipated to be realized; (xxvi)
disruption from Pinnacle Financial’s proposed merger with BNC with
customers, suppliers, employee or other business partners relationships;
(xxvii) the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement between
Pinnacle Financial and BNC; (xxviii) the risk of successful integration
of Pinnacle Financial’s and BNC’s businesses; (xxix) the failure to
obtain the necessary approvals by Pinnacle Financial and BNC
shareholders; (xxx) the amount of the costs, fees, expenses and charges
related to Pinnacle Financial’s proposed merger with BNC; (xxxi)
reputational risk and the reaction of the parties' customers, suppliers,
employees or other business partners to Pinnacle Financial’s proposed
merger with BNC; (xxxii) the failure of the closing conditions with
respect to Pinnacle Financial’s proposed merger with BNC to be
satisfied, or any unexpected delay in closing the proposed merger;
(xxxiii) the risk that the integration of Pinnacle Financial’s and BNC's
operations will be materially delayed or will be more costly or
difficult than expected; (xxxiv) the possibility that Pinnacle
Financial’s proposed merger with BNC may be more expensive to complete
than anticipated, including as a result of unexpected factors or events;
(xxxv) the dilution caused by Pinnacle Financial’s issuance of
additional shares of its common stock in its proposed merger with BNC;
and (xxxvi) general competitive, economic, political and market
conditions. Additional factors which could affect the forward looking
statements can be found in Pinnacle Financial’s Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K,
or BNC's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and
Current Reports on Form 8-K, in each case filed with the SEC and
available on the SEC's website at http://www.sec.gov.
Pinnacle Financial and BNC disclaim any obligation to update or revise
any forward-looking statements contained in this press release, which
speak only as of the date hereof, whether as a result of new
information, future events or otherwise.

Non-GAAP Financial Matters

This release contains certain non-GAAP financial measures, including,
without limitation, net income, earnings per diluted share, efficiency
ratio, core net interest margin, noninterest expense and the ratio of
noninterest expense to average assets and noninterest expense to the sum
of net interest income and noninterest income, in each case excluding
the impact of expenses related to other real estate owned, gains or
losses on sale of investments, FHLB prepayments and other matters for
the accounting periods presented. This release also includes non-GAAP
financial measures which exclude expenses associated with Pinnacle
Bank’s mergers with CapitalMark Bank & Trust, Magna Bank, Avenue
Financial Holdings, Inc. and BNC, as well as Pinnacle Financial’s and
its bank subsidiary’s investments in BHG. This release may also contain
certain other non-GAAP capital ratios and performance measures. These
non-GAAP financial measures exclude the impact of goodwill and core
deposit intangibles associated with Pinnacle Financial’s acquisitions of
Avenue, which Pinnacle Financial acquired on July 1, 2016, Magna Bank
which Pinnacle Bank acquired on September 1, 2015, CapitalMark Bank &
Trust which Pinnacle Bank acquired on July 31, 2015, Mid-America
Bancshares, Inc. which Pinnacle Financial acquired on November 30, 2007,
Cavalry Bancorp, Inc., which Pinnacle Financial acquired on March 15,
2006 and other acquisitions which collectively are less material to the
non-GAAP measure. The presentation of the non-GAAP financial information
is not intended to be considered in isolation or as a substitute for any
measure prepared in accordance with GAAP. Because non-GAAP financial
measures presented in this release are not measurements determined in
accordance with GAAP and are susceptible to varying calculations, these
non-GAAP financial measures, as presented, may not be comparable to
other similarly titled measures presented by other companies.

Pinnacle Financial believes that these non-GAAP financial measures
facilitate making period-to-period comparisons and are meaningful
indications of its operating performance. In addition, because
intangible assets such as goodwill and the core deposit intangible, and
the other items excluded each vary extensively from company to company,
Pinnacle Financial believes that the presentation of this information
allows investors to more easily compare Pinnacle Financial’s results to
the results of other companies. Pinnacle Financial’s management utilizes
this non-GAAP financial information to compare Pinnacle Financial’s
operating performance for 2017 versus certain periods in 2016 and to
internally prepared projections.

Additional Information About the Proposed Transaction and Where to
Find It

Investors and security holders are urged to carefully review and
consider each of Pinnacle Financial's and BNC's public filings with the
SEC, including but not limited to their Annual Reports on Form 10-K,
their proxy statements, their Current Reports on Form 8-K and their
Quarterly Reports on Form 10-Q.

The documents filed by Pinnacle Financial with the SEC may be obtained
free of charge at Pinnacle Financial's website at www.pnfp.com,
under the heading "About Pinnacle" and the subheading "Investor
Relations," or at the SEC's website at www.sec.gov.
These documents may also be obtained free of charge from Pinnacle
Financial by requesting them in writing to Pinnacle Financial Partners,
Inc., 150 Third Avenue South, Suite 900, Nashville, Tennessee 37201,
Attention: Investor Relations, or by telephone at (615) 744-3700.

The documents filed by BNC with the SEC may be obtained free of charge
at BNC's website at www.bncbanking.com
under the "Investor Relations" section, or at the SEC's website at www.sec.gov.
These documents may also be obtained free of charge from BNC by
requesting them in writing to BNC Bancorp, 3980 Premier Drive, Suite
210, High Point, North Carolina 27265, Attention: Investor Relations, or
by telephone at (336) 869-9200.

In connection with the proposed transaction, Pinnacle Financial has
filed a registration statement on Form S-4 with the SEC which includes a
preliminary joint proxy statement of Pinnacle Financial and BNC and a
preliminary prospectus of Pinnacle Financial, and each party will file
other documents regarding the proposed transaction with the SEC. Before
making any voting or investment decision, investors and security holders
of Pinnacle Financial and BNC are urged to carefully read the entire
registration statement and the definitive joint proxy
statement/prospectus, when they become available, as well as any
amendments or supplements to these documents and any other relevant
documents filed with the SEC, because they will contain important
information about the proposed transaction. A definitive joint proxy
statement/prospectus will be sent to the shareholders of each
institution seeking the required shareholder approvals. Investors and
security holders will be able to obtain the registration statement and
the joint proxy statement/prospectus free of charge from the SEC's
website or from Pinnacle Financial or BNC as described in the paragraphs
above.

This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of such jurisdiction.

Participants in the Solicitation

Pinnacle Financial, BNC and certain of their directors and executive
officers may be deemed participants in the solicitation of proxies from
Pinnacle Financial's and BNC's shareholders in connection with the
proposed transaction. Information about the directors and executive
officers of Pinnacle Financial and their ownership of Pinnacle Financial
common stock is set forth in the definitive proxy statement for Pinnacle
Financial's 2017 annual meeting of shareholders, as previously filed
with the SEC on March 9, 2017, and other documents subsequently filed by
Pinnacle Financial with the SEC. Information about the directors and
executive officers of BNC and their ownership of BNC's common stock is
set forth in Amendment No. 1 to BNC's 2016 Annual Report on Form 10-K,
as previously filed with the SEC on March 24, 2017, and other documents
subsequently filed by BNC with the SEC. Shareholders may obtain
additional information regarding the interests of such participants by
reading the registration statement and the definitive joint proxy
statement/prospectus. Free copies of these documents may be obtained as
described in the paragraphs above.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – UNAUDITED

March 31, 2017

December 31, 2016

March 31, 2016

ASSETS

Cash and noninterest-bearing due from banks

$

95,215,622

$

84,732,291

$

77,778,562

Interest-bearing due from banks

94,775,935

97,529,713

304,031,806

Federal funds sold and other

2,682,574

1,383,416

767,305

Cash and cash equivalents

192,674,131

183,645,420

382,577,673

Securities available-for-sale, at fair value

1,579,776,402

1,298,546,056

1,017,329,867

Securities held-to-maturity (fair value of $25,035,844,
$25,233,254 and $31,521,474 March 31, 2017, December 31, 2016 and
March 31, 2016, respectively)

This information is preliminary and based on company data available
at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND
YIELDS-UNAUDITED

(dollars in thousands)

Three months ended

Three months ended

March 31, 2017

March 31, 2016

AverageBalances

Interest

Rates/ Yields

AverageBalances

Interest

Rates/ Yields

Interest-earning assets

Loans (1)

8,558,267

93,218

4.49

%

$

6,742,054

$

74,404

4.49

%

Securities

Taxable

1,202,806

6,433

2.17

%

810,913

4,467

2.22

%

Tax-exempt (2)

238,111

1,678

3.83

%

182,762

1,494

4.40

%

Federal funds sold and other

262,790

814

1.26

%

282,867

609

0.87

%

Total interest-earning assets

10,261,974

$

102,143

4.06

%

8,018,596

$

80,974

4.09

%

Nonearning assets

Intangible assets

566,221

440,466

Other nonearning assets

593,459

392,916

Total assets

$

11,421,654

$

8,851,978

Interest-bearing liabilities

Interest-bearing deposits:

Interest checking

$

1,918,327

$

1,724

0.36

%

$

1,404,963

$

932

0.27

%

Savings and money market

3,900,321

4,609

0.48

%

2,997,586

2,952

0.40

%

Time

845,949

1,786

0.86

%

674,382

1,031

0.61

%

Total interest-bearing deposits

6,664,597

8,119

0.49

%

5,076,931

4,915

0.39

%

Securities sold under agreements to repurchase

79,681

50

0.25

%

69,129

48

0.28

%

Federal Home Loan Bank advances

212,951

904

1.72

%

383,131

536

0.56

%

Subordinated debt and other borrowings

355,082

4,303

4.92

%

162,575

1,573

3.89

%

Total interest-bearing liabilities

7,312,311

13,376

0.74

%

5,691,766

7,072

0.50

%

Noninterest-bearing deposits

2,434,875

-

-

1,960,083

-

-

Total deposits and interest-bearing liabilities

9,747,186

$

13,376

0.56

%

7,651,849

$

7,072

0.37

%

Other liabilities

17,396

11,976

Stockholders' equity

1,657,072

1,188,153

Total liabilities and stockholders' equity

$

11,421,654

$

8,851,978

Netinterestincome

$

88,767

$

73,902

Net interest spread (3)

3.32

%

3.59

%

Net interest margin (4)

3.60

%

3.78

%

_______________

(1)

Average balances of nonperforming loans are included in the
above amounts.

(2)

Yields computed on tax-exempt instruments on a tax equivalent
basis.

(3)

Yields realized on interest-bearing assets less the rates paid
on interest-bearing liabilities. The net interest spread
calculation excludes the impact of demand deposits. Had the impact
of demand deposits been included, the net interest spread for the
quarter ended March 31, 2017 would have been 3.51% compared to a
net interest spread of 3.72% for the quarter ended March 31, 2016.

(4)

Net interest margin is the result of annualized net interest
income calculated on a tax equivalent basis divided by average
interest-earning assets for the period.

This information is preliminary and based on company data available
at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

(dollars in thousands)

March

December

September

June

March

December

2017

2016

2016

2016

2016

2015

Asset quality information and ratios:

Nonperforming assets:

Nonaccrual loans

$

25,051

27,577

28,487

33,785

42,524

29,359

Other real estate (ORE) and other nonperforming assets (NPAs)

6,235

6,090

5,656

5,183

5,338

6,990

Total nonperforming assets

$

31,286

33,667

34,143

38,968

47,862

36,349

Past due loans over 90 days and still accruing interest

$

1,110

1,134

2,093

1,623

4,556

1,768

Troubled debt restructurings (5)

$

14,591

15,009

8,503

9,861

9,950

8,088

Net loan charge-offs

$

4,282

4,314

7,271

6,108

7,087

3,785

Allowance for loan losses to nonaccrual loans

232.9

%

213.9

%

211.5

%

181.8

%

146.4

%

222.9

%

As a percentage of total loans:

Past due accruing loans over 30 days

0.17

%

0.26

%

0.24

%

0.33

%

0.32

%

0.31

%

Potential problem loans (6)

1.27

%

1.36

%

1.13

%

1.38

%

1.65

%

1.61

%

Allowance for loan losses

0.68

%

0.70

%

0.73

%

0.87

%

0.91

%

1.00

%

Nonperforming assets to total loans, ORE and other NPAs

0.36

%

0.40

%

0.41

%

0.55

%

0.70

%

0.55

%

Nonperforming assets to total assets

0.27

%

0.30

%

0.31

%

0.40

%

0.52

%

0.42

%

Classified asset ratio (Pinnacle Bank) (8)

12.9

%

16.4

%

15.2

%

19.3

%

24.2

%

18.7

%

Annualized net loan charge-offs to avg. loans (7)

0.20

%

0.21

%

0.35

%

0.35

%

0.42

%

0.23

%

Wtd. avg. commercial loan internal risk ratings (6)

4.5

4.5

4.6

4.5

4.5

4.5

Interest rates and yields:

Loans

4.49

%

4.60

%

4.43

%

4.53

%

4.49

%

4.46

%

Securities

2.44

%

2.26

%

2.29

%

2.46

%

2.62

%

2.45

%

Total earning assets

4.06

%

4.11

%

3.98

%

4.06

%

4.09

%

4.01

%

Total deposits, including non-interest bearing

0.36

%

0.33

%

0.31

%

0.29

%

0.28

%

0.27

%

Securities sold under agreements to repurchase

0.25

%

0.22

%

0.23

%

0.24

%

0.28

%

0.21

%

FHLB advances

1.72

%

1.38

%

0.87

%

0.77

%

0.56

%

0.42

%

Subordinated debt and other borrowings

4.92

%

4.56

%

4.15

%

4.19

%

3.89

%

3.57

%

Total deposits and interest-bearing liabilities

0.56

%

0.51

%

0.46

%

0.44

%

0.37

%

0.34

%

Pinnacle Financial Partners capital ratios (8):

Stockholders’ equity to total assets

14.7

%

13.4

%

13.4

%

13.0

%

13.3

%

13.3

%

Common equity Tier one capital

9.8

%

7.9

%

7.6

%

7.9

%

7.8

%

8.6

%

Tier one risk-based

10.6

%

8.6

%

8.4

%

8.8

%

8.7

%

9.6

%

Total risk-based

13.7

%

11.9

%

10.5

%

11.0

%

11.0

%

11.3

%

Leverage

10.3

%

8.6

%

8.3

%

8.7

%

8.8

%

9.4

%

Tangible common equity to tangible assets

10.4

%

8.8

%

8.7

%

8.9

%

8.9

%

8.6

%

Pinnacle Bank ratios:

Common equity Tier one

11.1

%

9.3

%

8.6

%

8.4

%

8.3

%

9.0

%

Tier one risk-based

11.1

%

9.3

%

8.6

%

8.4

%

8.3

%

9.0

%

Total risk-based

12.9

%

11.2

%

10.5

%

10.6

%

10.6

%

10.6

%

Leverage

10.9

%

9.2

%

8.6

%

8.3

%

8.4

%

8.8

%

Construction and land development loans as a percent of total
capital (21)

75.2

%

80.3

%

87.9

%

89.7

%

86.5

%

90.2

%

Non-owner occupied commercial real estate and multi-family as a
percent of total capital (21)

220.9

%

256.0

%

265.5

%

253.9

%

242.5

%

251.4

%

This information is preliminary and based on company data available
at the time of the presentation.

Return on average tangible common equity (excluding
merger-related charges)

14.89

%

16.34

%

16.01

%

15.64

%

15.64

%

15.81

%

Total average assets

$

11,421,654

11,037,555

10,883,547

9,305,941

8,851,978

8,565,341

Net interest margin

3.60

%

3.72

%

3.60

%

3.72

%

3.78

%

3.73

%

Adjustment due to fair value

0.21

%

0.32

%

0.21

%

0.22

%

0.20

%

0.18

%

Core net interest margin

3.39

%

3.40

%

3.39

%

3.50

%

3.58

%

3.55

%

This information is preliminary and based on company data available
at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

1. Ratios are presented on an annualized basis.

2. Net interest margin is the result of net interest income on a tax
equivalent basis divided by average interest earning assets.

3. Total revenue is equal to the sum of net interest income and
noninterest income.

4. Efficiency ratios are calculated by dividing noninterest expense
by the sum of net interest income and noninterest income.

5. Troubled debt restructurings include loans where the company, as
a result of the borrower’s financial difficulties, has granted a
credit concession to the borrower (i.e., interest only payments for
a significant period of time, extending the maturity of the loan,
etc.). All of these loans continue to accrue interest at the
contractual rate.

6. Average risk ratings are based on an internal loan review system
which assigns a numeric value of 1 to 10 to all loans to commercial
entities based on their underlying risk characteristics as of the
end of each quarter. A "1" risk rating is assigned to credits that
exhibit Excellent risk characteristics, "2" exhibit Very Good risk
characteristics, “3” Good, “4” Satisfactory, “5” Acceptable or
Average, “6” Watch List, “7” Criticized, “8” Classified or
Substandard, “9” Doubtful and “10” Loss (which are charged-off
immediately). Additionally, loans rated “8” or worse that are not
nonperforming or restructured loans are considered potential problem
loans. Generally, consumer loans are not subjected to internal risk
ratings.

7. Annualized net loan charge-offs to average loans ratios are
computed by annualizing quarter-to-date net loan charge-offs and
dividing the result by average loans for the quarter-to-date period.

8. Capital ratios are calculated using regulatory reporting
regulations enacted for such period and are defined as follows:

Equity to total assets – End of period total stockholders’ equity as
a percentage of end of period assets.

Tangible common equity to total assets - End of period total
stockholders' equity less end of period goodwill, core deposit and
other intangibles as a percentage of end of period assets.

Leverage – Tier one capital (pursuant to risk-based capital
guidelines) as a percentage of adjusted average assets.

Tier one risk-based – Tier one capital (pursuant to risk-based
capital guidelines) as a percentage of total risk-weighted assets.

Total risk-based – Total capital (pursuant to risk-based capital
guidelines) as a percentage of total risk-weighted assets.

Tier one common equity to risk weighted assets - Tier 1 capital
(pursuant to risk-based capital guidelines) less the amount of any
preferred stock or subordinated indebtedness that is considered as
a component of Tier 1 capital as a percentage of total
risk-weighted assets.

9. Book value per share computed by dividing total stockholders’
equity less preferred stock by common shares outstanding.

10. Amounts are included in the statement of operations in “Gains on
mortgage loans sold, net”, net of commissions paid on such amounts.

11. At fair value, based on information obtained from Pinnacle’s
third party broker/dealer for non-FDIC insured financial products
and services.

12. Core deposits include all transaction deposit accounts, money
market and savings accounts and all certificates of deposit issued
in a denomination of less than $250,000.

The ratio noted above represents total core deposits divided by
total funding, which includes total deposits, FHLB advances,
securities sold under agreements to repurchase, subordinated
indebtedness and all other interest-bearing liabilities.

13. Associate retention rate is computed by dividing the number of
associates employed at quarter-end less the number of associates
that have resigned in the last 12 months by the number of associates
employed at quarter-end. Associate retention rate does not include
associates at acquired institutions displaced by merger.

14. Employment and unemployment data is from BERC- MTSU & Bureau of
Labor Statistics. Labor force data is seasonally adjusted. The most
recent quarter data presented is as of the most recent month that
data is available as of the release date. Historical data is subject
to update by the BERC- MTSU & Bureau of Labor Statistics. Historical
data is presented based on the most recently reported data available
by the BERC- MTSU & Bureau of Labor Statistics. The Nashville home
data is from the Greater Nashville Association of Realtors.

15. Adjusted pre-tax, pre-provision income excludes the impact of
investment gains and losses on sales and impairments of securities,
net, as well as other real estate owned expenses and merger-related
charges.

16. Represents one month's supply of homes currently listed with MLS
based on current sales activity in the Nashville MSA.

17. Represents investment gains (losses) on sales and impairments,
net occurring as a result of both credit losses and losses incurred
as the result of a change in management's intention to sell a bond
prior to the recovery of its amortized cost basis.

18. The dividend payout ratio is calculated as the sum of the
annualized dividend rate divided by the trailing 12-months fully
diluted earnings per share as of the dividend declaration date.

19. Earnings from equity method investment includes the impact of
the issuance of subordinated debt as well as the funding costs of
the overall franchise. Income tax expense is calculated using
statutory tax rates.

20. Tax effect calculated using the blended statutory rate of 39.23%
for all periods presented.

21. Calculated using the same guidelines as are used in the Federal
Financial Institutions Examination Council's Uniform Bank
Performance Report.

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